International Distribution Company Pvt. Ltd. manufactures an assortment of high-performance engines for small boats. The average selling price for various units is \($575\).

The associated variable cost is \($415\) per unit. Fixed costs for the firm average \($180,000\) annually.

a. What is the break-even point in units for the company?

b. What is the dollar sales volume the firm must achieve to reach the break-even point?

c. What is the degree of operating leverage (that is, the ratio of the percent change in EBIT divided by the corresponding percentage change in sales) for a production and sales level of 5,200 units for the firm? (Calculate to three decimal places.)

d. What will be the projected effect on earnings before interest and taxes if the firm’s sales level should increase by 25 percent from the volume noted in part (c)?